Raymond Jamesâ reign as the largest US investment bank following the decisions of Goldman Sachs and Morgan Stanley to become bank holding companies was short-lived, as the regional bank will be following in their footsteps.

In a statement, the bank insisted its decision to seek holding company status was already part of its long-term business plans.
The bank said it is making the change because it would allow a higher proportion of profitable corporate lending.

The Federal Reserve will need to approve the application by Raymond James, which said it plans to become a holding company by summer 2009

Raymond James chief executive Thomas James said in a statement: “It’s an unfortunate misperception that Goldman Sachs, Morgan Stanley and now Raymond James are fundamentally changing their business models. In fact, these changes are more form than substance in that regard.”

Jeff Julien, chief financial officer for Raymond James, added: “It’s important to note that this move isn’t in response to an immediate need or to follow in the footsteps of other firms—although it’s becoming obvious that the future of the industry is to be regulated by the Federal Reserve.”

With a market capitalization of $4.58bn (€3.13bn), Raymond James had jumped several competitors in the week after Lehman Brothers filed for bankruptcy and both Goldman and Morgan Stanley filed to become bank holding companies, as reported by the Wall Street Journal.

The title of largest investment bank in the US, which no longer carries the prestige it once had, now passes to mid-market specialist bank Jefferies, with $3.89bn in market cap. Goldman Sachs, by comparison, entered the year with a market cap of $84bn.

The decision by Raymond James means that the six biggest investment banks have all either been acquired, have chosen to become commercial banks, or in the case of Lehman Brothers filed for bankruptcy.